Vauxhall to terminate all dealer contracts in huge shake-up

Vauxhall to terminate all dealer contracts in huge shake-up

VAUXHALL will serve notice on all its UK dealers in a huge shake-up of the network.

Stephen Norman, managing director of Vauxhall, revealed to the press today that he had been in talks with dealer groups and that they would be issuing notice to all of them on April 30, sparking a two-year termination period.

He said: ‘Today, all of the Opel and Vauxhall countries, that’s basically all of Europe, have been in contact with the investors (dealer groups) in the Opel and Vauxhall franchises to announce that the decision has been taken to refranchise.

‘In other words, we’re terminating all of the current contracts with two years’ notice with effect from April 30 this year, and so the termination will come into effect on April 30, 2020.

‘Then, obviously it’s different by market, but in the vast majority of cases we will be proposing in the next few weeks new contracts to the majority of those retail dealers who are currently with us.’

Currently there are 326 Vauxhall dealerships in the UK, owned by 93 different groups, with more than 11,000 people employed within it. It is not known how many will remain after the shake

Effectively, this move is Vauxhall putting all its dealers under threat of redundancy so it can rehire the ones it wants to keep and shed the ones it wishes to lose.

Norman added: ‘Each and every one of these cases will be subject to individual negotiation. Nobody is being sacked.

‘The profitability of the network is positive in Quarter 1 last year and the full year last year, but the amount of money being made is – in our opinion – insufficient. As things stand today we want to protect the profitability of the franchise as time goes by.’

The timescale given suggests that dealers will know by the summer whether they can continue with the brand.

‘Today I have made the telephone calls,’ said Norman. ‘This week we will send out the registered letters to investors to advise them of what our intentions are, and in Q3 of this year, we will be sending out the contracts to those investors who we are proposing new contracts for, and of course, the end of the process will be in 2020, when the two year notice period comes to an end.’

Vauxhall’s sales have been falling dramatically in the UK over the last year – they were down 22 per cent in 2017. Vauxhall’s move aims to help boost profitability of the dealers who win a new contract.

PSA Group took ownership of the brand in March 2017 and has dramatically changed the brand’s sales tactics. They have pulled back from daily rental and pre-registrations and in doing so have relinquished second place in the UK sales charts to Volkswagen.

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